Air India Express, a subsidiary of Air India, is in the process of a merger low cost domestic airline AirAsia India with itself, unveiling its new brand identity last week.
The Air India Group, comprising Air India, Air India Express, AIX Connect and Vistara, is owned by the Tatas, which is also in the process of consolidating its aviation business.
As part of this, Vistara, a 51:49 joint venture airline between Tata Sons and Singapore Airlines, is also in the process of merging with AI India.
“Air India Express’ focus will be on routes with a higher share of leisure travelers and a higher share of price-sensitive customers. In fact, more non-business customers, while Air India will mainly focus on higher revenue routes. which requires business class and higher level of onboard services,” Singh told PTI in an interaction.
He said the Air India Express network will be structured to fly to destinations where Air India does not fly as it currently has other priorities.
It will have to be a rationalized network and therefore, at least in the short term, Air India Express will not operate on routes like Delhi-Mumbai, a route that has higher yield customers and is very well served by Air India.
He said the difficult part of the merger between Air India Express and AIX Connect (formerly AirAsia India) has already been done with the integration of back-end platforms, processes and manuals, among others, adding that “there is now a legal process That This process is currently ongoing and normally takes six to nine months. We hope that this process will be completed by the end of March next year.
Moreover, since Air India Express has a codeshare agreement with Air India, it will not incur any loss in such markets by flying the latter’s connecting passengers to the domestic destinations it serves.
For example, he said, if Air India has a connecting passenger coming from London who needs to go to Surat, Air India can sell that route on an Air India coded flight, which will be operated by Air India Express.
“So it’s actually the synergy benefits that are unlocked in this arrangement,” he added.
On competition from market leader IndiGo, Singh said Air India Express has its strengths, which it will play on.
“We are not looking to spread our capacity across the country. We will first consolidate our presence on the routes where we are already active, achieve meaningful scale there and then look at other markets. So this is the broad thinking for our networks,” he said.
“We are in the market, so obviously we will compete with each other, but there will be routes where we can have some advantage. There may be routes where we get feeds from Air India, and that will actually supplement our own occupancy. and that is our strength,” Singh emphasizes.
He said that with the bulk of the integration work completed, we now have the growth agenda in place for the company, which is preparing for, deploying and operationalizing that growth.
In addition, the airline is also making progress on its transformation agenda with certain targets, including plans to have a market share of around 20 percent on short, international and 15 percent on domestic flights, he said.
“We also have a certain matrix for efficiency and profitability as a target. Broadly speaking, we look at the market, at the business model, the organization and the value. So these are our four pillars for the transformation,” he said.
Singh noted that profitability is a function of many things: product, network and scale. If the operations are small scale, it will be very difficult to be profitable, especially in a hyper-competitive market like India.
Profitability is not just about your route network, but also about your products.
The short-haul international markets are inherently more profitable because an airline can optimize its aircraft flying long distances. So your unit costs will be lower and there will also be lower fuel prices, he added.
“So for all these reasons, you can’t look at an isolated network… there will be a lot of transmission connections happening. And that will increase efficiency, allowing you to better utilize your capacity,” Singh said.